I think I'm a part of the first generation of journalists to skip print media entirely, and I've learned a lot these last few years at Forbes. My work has appeared on TVOvermind, IGN, and most importantly, a segment on The Colbert Report at one point. Feel free to follow me on Twitter or on Facebook, write me on Facebook or just email at paultassi(at)gmail(dot)com. I'm also almost finished with my sci-fi novel series, The Earthborn Trilogy.

I’m not here to speculate on whether Edge’s source is reliable, but I will say I’m not going to believe anything I hear about the next generation of consoles unless it’s coming directly from the companies themselves. Rather, I want to talk about why this news item cannot be true, at least by the time the console is ready for public release.

The idea behind killing used game sales is a relatively straightforward one. It’s a simple, multi-stage process that ends up with those who made the game getting the short end of the stick.

- Gamestop sells a new game for $60, they get a fraction, the publisher gets a fraction, the developer gets a fraction, and so on.

- A customer sells that game back to Gamestop a month later for $20.

- Gamestop sells that game to another customer for $40, pocking $20 in pure profit while the publishers and developers get nothing from what is essentially a second sale.

The used games market is enormous, particularly in this rough economy, and it’s a huge part of the reason GameStop has managed to thrive in an age where Blockbusters and Barnes and Nobles are closing left and right.

It makes sense why developers and publishers want to be paid for copies of their own game, but at what cost? What would Microsoft have to give up to implement something like this?

Even when this was just a mere rumor, the internet was flooded with comments on forums and message boards saying that if the next generation Xbox did in fact come with such a restriction, they would automatically buy whatever Sony put out.

The truth is, there isn’t all that much space between Sony and Microsoft’s consoles, at least not in their current form, and many feel that may continue into the future. Yes, Microsoft has a few exclusive franchises Sony doesn’t, but it also has ruffled feathers for charging an arm and a leg for Xbox Live. By instituting a policy that would eliminate used games for the system entirely, that could be enough to send a lot of people over the edge and into the arms of their competitors for good.

But what if this is part of some grand conspiracy in the next console generation, and Sony is in on it as well? What if the two companies sign a blood pact with the intent to eliminate used games sales altogether? Well, that wouldn’t quite work either, as Nintendo’s Wii U already has no such restriction, and gamers could embrace them instead. Additionally, if this “Steam Box” ever comes to fruition, it would be in a prime place to take advantage of all those who want cheap games, but can no longer get them on consoles.

Many, many people primarily buy used games for their systems, due to the fact that they are often significantly cheaper than new copies. Many would probably not play video games at all unless they could get these titles for cheap, or sell back their own games to help pay for new ones. Not to mention the fact that this move would be effectively declaring outright war on GameStop. Sure they sell used games, but they also sell new ones, and if their stock is dropping when this is just a rumor, what happens if it’s a reality? That’s a longstanding alliance they probably wouldn’t want to shatter. GameStop is none too pleased with even whispers of news like this, and responded in kind yesterday to the rumor via a spokesman:

“We know the desire to purchase a next-generation console would be significantly diminished if new consoles were to prohibit playing pre-owned games, limit portability or not play new physical games.”

That’s the gist of what I’m saying here, and it’s been met by a firm “no comment” from Microsoft.

Even if console manufacturers did want to go full steam ahead with this, the only way it would work would be if prices of new games started falling quickly after release, or at least far faster than they do currently. The companies would have to match the equivalent price of whatever the games could be sold for used at GameStop in order to attract customers. But would the revenue loss on fully priced $60 used titles offset that sort of move as prices fall? That’s unclear, and it might not be worth it for Sony or Microsoft.

Lastly, I just don’t buy this idea that used games hurt more than they help. How many people have gotten into a game series by picking up an older game for cheap at the store? How many people have bought a new game because they sold back four of their old ones? How many have discovered a new franchise they love after borrowing a game from their friend? These avenues would be effectively eliminated, and such a move could hamstring either a specific system (Xbox in this case), or the entire concept of consoles if they all colluded to eradicate used games sales.

And do we really have to go with other analogies here? Publishers and developers can often come off as wrongly lamenting an idea that’s been a part of the economy for as long as there’s been an economy. When you buy something, you own it, and you can resell it to whoever you choose. Does Apple need a cut when I sell my buddy my last-gen iPod for $50? Does Ford demand cash when I put my 2009 Fusion on the market after paying for it in full myself? This idea seems contrary to common sense, though as we move into the digital age, there might not be such a thing as “secondhand products” anymore. But there are now, and until there aren’t, this can’t happen.

I don’t believe the rumor, but even if I did, I can’t imagine it’s an idea that will make it past a “what if” concept. And it shouldn’t.

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I can resell a CD… And physical CD’s still make up the bulk of record label revenues.

Just because people have been stupid enough to let the music industry push them into a model of licensing rather than ownership doesn’t mean it’s a good idea for the gaming industry. Which is the point of this article. The comparison is meant to point out the first sell doctrine… Not to say that licensing is different.

If Microsoft (or any console manufacturer for that matter) went ahead with this idea, I wouldn’t buy that console. Why? Because one of the reasons I like consoles is that you can lend and trade games with friends. As a student I’m not that rich to buy 60 dollar releases every month so having friends with the same console I can easily lend games to them and from them. It’s really great and I know it might cheat some people out of money but lending movies, tools, vehicles is part of living in a community.

And if Microsoft or any other company did this, the console would be locked and one of the distinct advantages over PC games (now that we are moving into a more digital age with Steam on the forefront) is lost. I would just switch to PC gaming instead of buying a locked console since most games are multiplatform and they cost less on PC. And exclusive games won’t tide me over.

But I have given up on Microsoft anyhow. They just aren’t a company that wants me as a customer. They removed their Xbox shows like Inside Xbox, which I found fun and quirky, because it didn’t talk to their customer base, or something like that. Basically, Microsoft cares more about the non-gamer, casual gamer, family member type rather than the hardcore fans who helped them become such an established presence in the gaming world.

And I just sort of feel left behind. I bought an Xbox 360 because how it looked and functioned way back in 2006-2007. They have made several interface changes which I don’t like and it just feels like the product I loved so dearly, so much that I abandoned PC gaming for a while, to something I almost never use. I just don’t think Microsoft wants me as a customer anymore. They appealed to me in the early Xbox 360 days but now… I dunno, I can’t find a reason to like Xbox 360 apart from the excellent controller. Xbox Live costs way too much when PS3 is free (and so is PC, and better in every way when it comes to matchmaking). Plus, all the ads on the dashboard is really really annoying. It wasn’t there when I purchased the Xbox 360 and not a part of the deal on why I found the 360 attractive. It’s just ugly, it feels like I’m browsing a website with ads when I use the 360.

If a new Xbox is announced and a new Playstation… I’ll go with Playstation unless something horrible happens. PS3 doesn’t mash ads in your face and doesn’t pay for basic online functionality. And I’ll continue to use my PC as a gaming platform too.

Sorry for the rant-esque comment but I have just been so dissapointed with the 360 in the last two-three years.

I’m pretty sure both Microsoft and Sony will have some form of selective per-user DRM that at least specific publishers can employ, similar to how Steam works. They would have to be extremely stupid from a business-perspective to not at least keep that door wide open, since neither the publishers nor platform owners themselves (royalties) get any money from sales that GameStop and similar shops make. Both Microsoft/Sony and Publishers/Developers lose and only GameStop wins in that relationship.

What I find a lot more interesting is the other rumor that the next console might require an Online connection to work: “Microsoft’s next console will require an Internet connection in order to function” and in what way that will happen.

I find it very likely that they will focus more on Digital Distribution of even full price “AAA” games themselves and possibly offer Sales like on Steam, which “Xbox Live” did this year at least throughout December: http://www.neogaf.com/forum/showthread.php?t=503957 (they also likely get a much higher margin on Digital Sales, since the Retailer cut is about ~30% and Digital Distribution Platform Cut usually around ~70%)

What I don’t get is why people would buy something “Pre-Owned” when they know Devs get nothing and the price difference for reasonably new games is somewhere around $2-5: http://www.gamestop.com/xbox-360/games/the-walking-dead-a-telltale-games-series/104328 , since apparently about half of GameStops sales were “Pre-Owned” based on their numbers that is a lot of lost sales. Publishers would probably rather see it only half of the people play their games, but give them the money than have double the consumer base but get less because of increasingly more Retailers (like GameStop, Best Buy, Amazon etc.) are cutting into their profits.

Remember that content industries have done entirely more radical things in the US to protect their interests, for instance outright outlaw rentals of both Record/Music CDs with the Record Rental Amendment of 1984 and software with the Computer Software Rental Amendment Act of 1990.

Frankly, I also don’t think this would be such a big deal, because overall gamers as a whole have shown again and again that they have no self-control, even amongst those that talk big will often cave in to whatever business practices they are being subjected to when there’s a new entry in their favorite franchise and they get to see the Trailers and everything. I find this to be a very sad thing, but I don’t think most of even the ones taking this stance now will feel the same way after the reveal of “awesome” games at the next E3 or when this new console isn’t an abstract thought, but they see their friends play the new Call of Duty or NFL game on their shiny new toy. The best example would be that screenshot making the round of over half the “Modern Warfare 3 Boycott Group” playing exactly that game hours after its Release.

Oh yeah, the “Steam Box” would obviously already not allow for “Used Sales”.

Hello Mr. Tassi I totally agree with you. You may not know: Last year the European High Court said that software companies must allow users to sell their licences (games, software). No mather if the game is on DVD or downloaded you must be able to give it to a third party. Actually Steam is sued in Germanay because they don’t allow it yet. So MS has to release a “clean” XBOX 720 in Europe which is able to resell the games on it.

It seems like all of your reservations can be solved if the new generation of consoles hit the stores alongside a fully developed digital distribution system complete with deep discounts for older games.

For all the folks that say they’d not by a Microsoft or Sony console if it made used games unusable: what if they just stop distributing hard copy games altogether? You can’t have a market in used games if there aren’t any physical copies…

“But I can’t afford buying games for $60 each!” you say? I haven’t bought more than a single game at that price in the last 5 years, thanks to Steam, so…

Imagine if Xbox Live starts offering older titles for 50-75% off like Steam does frequently now? Would you really complain about buying a second copy of “Your Favorite Game” if it only costs you $2-$4? At those prices, you can replace your entire games library AND EVERY GAME YOU’VE TRADED AWAY for less than a couple new games would cost.

Even if they only ever make their games cost less than $20, it’s still a far better deal than the current deal offered by GameStop for used games: It’s cheaper than GameStop charges for a used title, and you keep the games you already own (in digital).

It doesn’t take a conspiracy such as “two companies sign a blood pact with the intent to eliminate used games sales altogether” to make this work. Only a couple CEO’s that see the obvious success of Steam, hate the virtual losses they see in the existence of used game trading, and desire to move their company forward to where the market is going in the future.

If they each decide on their own, but make similar decisions, regarding how to take advantage of the opportunity offered by digital downloads, it will look like a conspiracy to an outside observer, but nothing of the sort is necessary for this to work.

You make some excellent arguments regarding why consoles waging a war on used games and the stores that make them available would not be a bright idea. However, I fear that it is greed and apprehensiveness which motivates the people who are opposed to used games and that they may ultimately make rash decisions without thinking things through. They may not have the foresight you have.

The thing that gets me concerning this issue of used game sales is the sense of entitlement the publishers and developers have. Car companies, as far as I know, receive no royalties for used vehicle sales, nor do the publishers and authors of books, nor record labels and recording artists. I also don’t hear a lot of hoopla about those industries trying to find ways to prevent the sale of their used product. Now while cars are more expensive by quite an order of magnitude than books, CDs, downloadable music, or books (either traditional or electronic; not that the latter are sold used) are generally a bit cheaper new than new games are. I would think with a successful game that sells enough copies to cover the costs of development, its promotional costs, and then nets the publisher and developer a tidy profit on top of that would be sufficient to let them leave well enough alone.

Is it just greed motivating this war or does it possibly have something to do with wanting to recoup losses from duds? I myself have occasionally known to buy a game I know received less-than-stellar reviews and kind of tanked because it was cheap and looked fun despite not being a hit or objectively good. The same goes for titles I had heard through the grapevine were underrated but excellent. Those are the kinds of games I end up being used.

I guess we’ll just have to wait and see what the new generation brings, and hopefully it won’t be the end of consoles or used games.

I find that I agree with you on almost every topic you address, but in this case I don’t think we’re on the same page. I guess there are two points in particular I’m not so sure about.

First, it seems you don’t think it’s viable for Sony and Microsoft to jump into practicing a concept like one-time activation codes simultaneously because the Wii U doesn’t restrict users that way, and they know or are afraid that Nintendo would cash in on a move like that. I really don’t think Nintendo would profit all that much from Sony and Microsoft customers if they were to “ban” used games. Even before the other two next-gen consoles have been unveiled, the Wii U is selling relatively poorly compared to Nintendo’s (conservative) projections, and companies like Ubisoft have already vocalized their skepticism in the Wii U’s longevity and appeal given what they’ve seen of its upcoming competitors. It looks like, yet again, Microsoft and Sony will have the kind of quality third part support Nintendo hasn’t in the last two generations. I think we’re going to see great titles released exclusively on Sony and Microsoft’s systems, and gamers can’t play those games without one of the two consoles. I don’t think Nintendo has a great deal to gain.

Second, did I read correctly that you really don’t think the used game industry hurts developers very much? I don’t have stats to back this up, but my intuition is that they greatly injure dev profits. Some people have almost exclusively used game libraries, and both hardware and software developers are either making nothing from these “customers” or are banking a negative net profit from the console sale. Unless you love the new game smell, or something, what’s the benefit to buying a new copy of a game instead of getting it at a big discount from another individual or a chain like Gamestop? None that I can think of, and most people will avoid buying new copies if they can. Even people that get hooked on particular games through borrowing it from a friend or some other second-hand method are just going to buy that game used. If it’s old enough to be borrowed, it’s old enough to be bought used, and there are always used copies to be bought. There are proportionally few game series out there that people might buy the second or third iterations of new. There are some, of course, but I don’t think that direct sales of these titles offsets the loss of other title sales. And unless you’re just dying to get a game on the day it releases, it’s easy to find “new” games used. I remember within 3 days of Halo 3′s release, I walked into a Gamestop and found a shelf full of recently re-sold copies.

Developers are dealing with the constraints of the present economy just as much as consumers are and, I would say, are actually in a worse position than consumers. Games are more expensive to make and cheaper to buy than they’ve been at any other point in game history. With quality studios closing their doors these days, we should support their efforts if we want to keep enjoying their titles. For the consumer, games are entertainment; for the developer, they’re livelihood. Consumers protect their own interests by looking out for the financial interests of developers.

Killing the used game market actually helps the consumers far more than people realize.

Let’s revisit your trade-in scenario. Customer buys new AAA title for $60. Customer then trades in the title, getting $20. STOP! Already, we have a problem with this scenario. Generally, a customer will only get $20 for a NEW AAA title soon after the game comes out, and ONLY as store credit, forcing the person to buy from that location (often Gamestop). With Gamestop already having the highest game prices around (any other retailer often has general coupons that apply to games), the customer is really getting shafted.

Although, you’re entirely correct in that Gamestop makes off like a bandit while the game publishers and developers get nothing after the first purchase. THIS is one of the main reasons why game costs are so darn high.

Well, let’s dream about this Anti-Used Game universe. If it were made so that games could only be claimed once, some things would have to change in order to make it worthwhile to the customer.

Drop the average cost of a new game to $30-$40 and interesting stuff happens! More people are willing to try out lower priced games due to the lower commitment, so this means a larger (potential) customer base (plus, people who may not be able to afford a $60 game can afford a lower priced one … OR, those that want multiple games no longer need to decide on one, they can go for two). And since used games can’t be sold, game developers and publishers get a cut on every single sale … and on a larger customer base.

What does this all mean? Everyone wins (except Gamestop)!

In other words, barring used game sales would allow the game companies to lower the average cost of their new games while still making far more money than they did in the past. Not only do they make more money, but it costs us less.

Also, a quick food for thought: Does prevention of selling a used game stop people from buying games digitally (where it’s extremely hard or impossible to sell your game)? No! Look at Steam as a great example.

-Platform owner sells console at loss -Gamestop gets revenue from game sales -Platform owner lost money selling that person a console -Publisher doesn’t see a dime from the game’s sale.

MS and Sony can easily do this without worrying, all of those people who buy used games likely were a money-loss for the platform owners as they never buy enough new games for the Platform owner to recoup their losses.

In short, used game buyers are unimportant. Even if every single one of them walk away from video gaming forever, MS and Sony aren’t losing a dime. Of course, they won’t walk away, they’ll start buying games new and the Industry will get the revenue Gamestop’s been siphoning away.